Madoff Trustee Complaint against J.P. Morgan Unsealed

The Trustee for the liquidation of Bernard L. Madoff Investment
Securities LLC (BLMIS) has announced that his complaint against JPMorgan
Chase & Co., JPMorgan Chase Bank, N.A., J.P. Morgan Securities LLC
and J.P. Morgan Securities Ltd. will be unsealed and made
available to the public.

According to a press release put out by trustee Irving H.
Picard, the complaint seeks to recover nearly $1 billion in fees and
profits and an additional $5.4 billion in damages for JPMC’s
decades-long role as BLMIS’s primary banker, aiding and abetting
Madoff’s fraud. All recovered monies will be placed into the Customer
Fund and distributed, pro rata, to BLMIS customers with valid claims.

The 114-page complaint, which includes quotations from
internal emails at the bank, contains substantial detail supporting
allegations that JPMC knew or should have known that Madoff was likely
engaging in fraud. “Incredibly, the bank’s top executives were warned in
blunt terms about speculation that Madoff was running a Ponzi scheme,
yet the bank appears to have been concerned only with protecting its own
investments in BLMIS feeder funds,” said Deborah Renner, a partner at
Baker & Hostetler, law firm for the trustee.

The complaint alleges that JPMC had a palpable concern
that Madoff was a fraud for years, but it was not until October 2008
that it reported Madoff to government officials. “Even then, JPMC
executives did not restrict the BLMIS bank account, even though it was
being used to launder money from the Ponzi scheme,” said Renner.

The complaint says JPMC repeatedly allowed suspicious
transactions for high dollar amounts to occur in the BLMIS account. In
addition, JPMC had financial reports in its possession that clearly
evidenced fraud.

Picard initially filed the complaint under seal because
JPMC had contended that information it had provided to the Trustee in
the course of his investigation was confidential.

“We have reached an agreement with opposing counsel to
unseal a large majority of the complaint, with the exception of several
allegations as well as the identities of the bank’s employees and
customers,” Renner said in the announcement. “There is much more to
come, in the way of documents and testimony, as we enter the discovery
phase of the litigation. We will push for more information from JPMC in
the course of the litigation so that the public can learn the full role
of the bank in aiding and abetting Madoff’s Ponzi scheme.”